Ita Unibanco, Brazils largest private bank, has revised its 2025 inflation forecast downward to 5.5% from 5.7%, citing falling gasoline prices and declining metallic commodity costs.The bank maintained its benchmark Selic rate projection at 15.25% for 2025 but flagged risks tied to global trade tensions and a potential economic slowdown.This adjustment reflects Brazils balancing act between domestic resilience and external volatility, particularly from the United States -China trade war reshaping commodity flows.The bank projects GDP growth of 2.2% in 2025, though with a downward bias, and 1.5% in 2026.
First-quarter 2025 GDP expanded by 1.6%, driven by agriculture and broad sectoral gains.Meanwhile, the United States dollar is expected to hold at R$5.75 through 2026, supported by interest rate differentials but pressured by fiscal risks.Ita Lowers Brazils Inflation Forecast, Holds Interest Rates Steady Amid Global Trade Uncertainty.
(Photo Internet reproduction)Ita warns that global trade disruptions could amplify Brazils vulnerability via commodity prices and capital flight, despite its relatively closed economy.
Monetary policy remains restrictive, with two 0.5% Selic hikes anticipated by mid-2025.However, the second increase hinges on international developments, including exchange rate stability.
Inflation risks skew downward if oil and metals slide further, but agricultural export demandspurred by Chinas pivot from United States tariffscould push food prices higher.Brazils Economic OutlookBeef and poultry exports to China surged 33% and 19% year-on-year in early 2025, lifting domestic soybean premiums to $1.15 over United States equivalents.Fiscal challenges compound uncertainties.
Ita forecasts primary deficits of 0.7% of GDP in 20252026, with public debt stabilization requiring stricter spending controls.The Central Banks Focus Survey contrasts with Itas outlook, predicting 5.65% inflation and a weaker real (R$5.90) for 2025.
Brazils labor market shows resilience, with unemployment projected at 6.8% in 2025.However, rising wages and productivity gaps risk fueling services inflation, which is already at 8.5%.
The bank stresses caution, noting global recession risks if trade conflicts escalate.Brazils economic trajectory now hinges on navigating external shocks and internal fiscal discipline, with Itas tempered forecasts underscoring the fragile equilibrium between growth and stability.